- Ford’s earnings outlook for 2025 notably left out any cushion for punitive import duties imposed for any lengthy period of time, and as a result could look even more grim than the steep decline his team already predicts. "Obviously it’s a devastating impact," Farley said.
Ford CEO Jim Farley assured investors that his team has a plan to shield the company from the worst effects of Donald Trump’s tariff threats—provided the former president doesn't go beyond brinkmanship and posturing.
Ahead of any new import taxes, Farley said Ford and its suppliers intend to stockpile vehicles and parts that typically move between the U.S. and Mexico.
If tariffs take effect, the strategy would create a de facto trade barrier at the Rio Grande, halting cross-border shipments and sealing off operations.
“We can make sure nothing crosses the border for a couple of weeks,” Ford CEO Jim Farley told analysts during the company’s fourth-quarter earnings call Wednesday. But beyond that, he warned, the U.S. auto industry could be looking at billions in lost profits.
That prospect is even more concerning given that Ford’s 2025 earnings outlook includes no cushion for potential import tariffs. Any new duties could deepen what is already expected to be a steep decline in profits.
The biggest winners from Trump’s proposed tariffs, Farley suggested, won’t be domestic automakers but Asian rivals that would face little additional impact.
Hyundai and its affiliate Kia already ship more than 600,000 cars into the U.S. annually, while Toyota imports another half-million—vehicles that would remain untouched by the administration’s planned tariff hikes, Farley said.
“If we’re going to have a tariff policy that lasts for a month—or whatever it’s going to be, years—it better be comprehensive for our industry,” he said. “We can’t just cherry-pick one place or the other, because this is a bonanza for our import competitors.”
Potentially major strategy shift required
Trump on Monday agreed to a 30-day moratorium on his planned tariff hikes for Mexico and Canada after both countries’ leaders promised to take steps to address border security and drug trafficking.
This is crucial for carmakers like General Motors, Stellantis, and even Audi, which significantly expanded their production footprint in the aftermath of the North American Free Trade Agreement to include Mexico, taking advantage of tariff-free exports into the U.S.
Farley’s company has been no exception.
For example, the Mach-e crossover, Ford’s signature EV whose name was taken from the wild horses roaming America’s great plains, is actually not a Stars and Stripes product but hecho en México.
If the Trump administration does move forward with hefty import duties, Farley said it would cost the U.S. auto industry billions of dollars in added profit headwinds.
“We would have to make some major strategy shifts in the U.S., build new plants et cetera, if this persists. Obviously, it’s a devastating impact,” Farley said.
Investors can only expect Ford to break even in Q1
And that’s the threat to a company that says it is comparatively well positioned to weather the tariff storm since 80% of its vehicles, more than half of its combustion engines, and all of its transmissions are built in the United States.
Volvo Cars, for example, likewise said on Thursday it would be examining whether to expand its manufacturing footprint to include more U.S. production.
On Wednesday, Ford warned investors the need to slim down bloated dealer inventories in some slow-moving models would result in a plunge in adjusted earnings from $2.8 billion before interest and taxes in last year’s first quarter to just zero in the current period.
As a result, annual underlying operating profit will would decline to $8.5 billion in a best-case scenario, a significant decline from $10.2 billion in 2024.
Worse, it could even come in as low as $7 billion potentially—and that’s before any debilitating effects from tariffs.
Shares in the carmaker are expected to drop 6% when trading on Thursday opens.
